The Financial and Operating Performance of Privatized Firms in Sweden

Motasam Tatahi () and Almas Heshmati ()
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Motasam Tatahi: European Business School London

No 3953, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the change in operating and financial performance of Swedish firms that were either partly or fully privatized during the period of 1989-2007. Two different methods are used to empirically investigate the performance of privatized firms. First, accounting data prior to and after the privatization are employed to measure the operating performance of privatized firms. We have found no significant difference in performances under state and private ownerships. Second, a return-based event study is found useful to measure the financial performance of privatized firms, since all the firms in the sample that were privatized have used an initial public offering (IPO). This approach allows comparison to the rest of the IPOs that were launched in the same period. It is found that the cumulative returns for the privatized firms are significantly different to private counterparts. Overall results, however, show that the privatization in Sweden was not as successful as it might have been expected and in comparison with those in other countries.

Keywords: Sweden; efficiency; performance measure; privatization; ratio analysis; event-study; public and private relationship (search for similar items in EconPapers)
JEL-codes: C12 D21 L25 L33 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009-01
New Economics Papers: this item is included in nep-bec, nep-eec and nep-eff
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